Method and system for making donations to charitable entities

ABSTRACT

A system for a user making a donation to a third party by redeeming reward points, including an issuing bank computer storing a user credit/debit card account and a user reward point account, and a funds processor programmed to send a web page to a user device querying the user if a donation should be made to a third party, receive a donation request from the user device to be funded by redeeming reward points; process the donation request with the issuing bank computer by requesting it to redeem reward points in order to fund the donation by reducing the number of reward points in the user reward point account, and providing payment to the funds processor of a monetary value corresponding to the reward points reduced; and convey the monetary value to an account associated with the third party.

BACKGROUND OF THE INVENTION

The present invention relates to electronic trading, exchange,liquidation and bartering systems that allow users to donate rewardpoints and other value such as cash, credit, goods and services tocharitable organizations and individuals. The reward points that may bedonated are for example those already accumulated in airline frequentflyer programs, hotel reward programs, and credit card issuer rewardprograms. This would allow users to use their frequent flyer (orfrequent car rental, frequent dining, etc.) points for making a donationto a desired charity.

In the prior art, it is often desired to be able to make a charitablecontribution or donation to a charity. Problems often arise that inhibitor curtail the desires of the donor in this situation. One such problemis ease of making the donation. Often, it is required for a donor tomail in a check to a charity such as the Red Cross, or to make telephonecall, etc. Another problem in the donations field is that donors areconcerned that the intended charity may not be a charity in fact, butmay only have a charitable sounding name. Thus, although the intent isto donate money to a charitable cause, the money may end up in the handsof an unscrupulous recipient with no intentions on distributing thefunds to those in need.

Another problem that arise in the donations field is that individualsmay desire to have funds earmarked for certain groups or subgroups of acharity, but have no way of informing the charity of their intentions orensuring that the funds are distributed as they desire. For example, onemay donate money to the American Red Cross Hurricane Katrina Fund, butmay in fact want the money to be earmarked for disabled orphanedchildren that are homeless as a result of that hurricane.

These and other problems are addressed by the present invention as fullydescribed herein.

SUMMARY OF THE INVENTION

The present invention provides the ability for users to donate funds (inone or more various forms such as reward points, frequent flyer miles,cash, credit, goods, services and/or combinations of same) to one ormore designated recipients such as a service organization, charity, or aspecific subgroup or member of any such organization. In one aspect ofthe invention as described herein, a point of sale terminal is adaptedto enable donations to a charity or individual for example as part of apurchase transaction. Similarly, one may be able to make a charitabledonation using the present invention via a web site, which may or maynot be integrated with an ecommerce website similar to a point of saleparadigm.

The present invention contemplates that a donor may make donations usingcash from an account, credit from a credit card account, cash tenderedat the point of sale, and/or reward points that have been earned fromprevious transactions and/or or the current transaction being executed.The donor may direct the donations to recipients in one of variousmanners as described further herein.

Thus, the present invention is a method for making a donation to a thirdparty, wherein a user executes a purchase transaction using a cardlinked to a user account at a financial institution, the user accountstoring at least one indicia of value associated with the user. The useris queried via a point of donation device if a donation is desired to bemade by the user to a third party. If the user indicates that a donationis to be made to a third party, then value is transferred from the useraccount to a designated third party as a donation to the third party.

In one aspect, the user account stores reward points previouslyaccumulated by the user as a result of previous transactions, and thestep of transferring value from the user account to a designated thirdparty as a donation to the third party includes reducing the number ofreward points in the user account and transferring a corresponding valueto an account associated with the third party. The value transferred toan account associated with the third party may include a monetary valuethat is deposited to a monetary account associated with the third party,and/or reward points that are deposited to a reward account associatedwith the third party.

The reward points previously accumulated by the user as a result ofprevious transactions may include reward points that are earned by theuser as a result of executing previous purchase transactions associatedwith the card linked to the user account and/or reward points that areaggregated by the user from one or more different reward point accounts.

The user account may be a credit account associated with the user, andthe financial institution may make a payment of a donation amount to thethird party on behalf of the user and charge the donation amount to thecredit account associated with the user. The user account may be a debitaccount associated with the user, and the financial institution may makea payment of a donation amount to the third party on behalf of the userand charge the donation amount to the debit account (e.g. checkingaccount) associated with the user.

The point of donation device may be a point of sale device associatedwith the purchase transaction executed by the user, a web siteassociated with the purchase transaction executed by the user, or atelephone set associated with the purchase transaction executed by theuser. The point of donation device may query the user for an amount tobe donated and the user enters the amount to be donated into the pointof donation device, or the amount to be donated may be a default amountpreviously indicated by the user. In this case, the user may have theoption of overriding the default amount and entering a different amountfor that particular transaction into the point of donation device.

The point of donation device may query the user for an identification ofthe third party to which the donation will be made, and then the userenters the identification of the third party to which the donation willbe made into the point of donation device. The identification of thethird party may be a default identification previously indicated by theuser, in which case the user has the option of overriding the defaultidentification and entering a different identification for thatparticular transaction into the point of donation device.

In another aspect of the invention referred to herein as “topping off”,a user executes a purchase transaction, the amount of the transactioncorresponding to a purchase amount. The user tenders payment for thepurchase transaction in a tender amount, the tender amount being greaterthan the purchase amount. The user is queried if a donation is desiredto be made by the user to a third party for a donation amount, whereinthe donation amount is the difference between the ender amount and thepurchase amount. If the user indicates that a donation is to be made toa third party, then the donation amount is transferred to a designatedthird party as a donation to the third party in lieu of providing changefor the transaction back to the user.

In a similar manner, another “topping off” embodiment occurs under thisinvention when a user executing a purchase transaction, with the amountof the transaction corresponding to a purchase amount. The user isqueried if a donation is desired to be made by the user to a third partyfor a donation amount, wherein the donation amount is the differencebetween the purchase amount and the purchase amount rounded off to agreater amount. If the user indicates that a donation is to be made to athird party, then the user tenders payment for the purchase transactionin a tender amount equal to the purchase amount and the donation amount.The donation amount is then transferred to a designated third party as adonation to the third party in lieu of providing change for thetransaction back to the user.

As further described herein, a member of the system of the presentinvention may be one of the following types: a donor, an individualrecipient, an organizational recipient, a funds issuer, a fundsprocessor, or a point of donation provider.

BRIEF DESCRIPTION OF THE DRAWING

FIG. 1 is a block diagram of the invention.

FIG. 2 is a further detailed block diagram of the invention.

DETAILED DESCRIPTION OF THE PREFERRED EMBODIMENT

Under this invention, which is shown in block diagram form in FIG. 1, afunds processor provides the central management service for the system.The funds processor receives instructions from a point of donationprovider, which may for example be a physical point of sale device, aweb site, a telephone-based customer service representative, and thelike. A donor, which is typically an individual such as a consumer, willinteract with a point of donation provider to request a donation to bemade to an intended recipient, which may be an organizational recipient(such as the USO) or to a specific individual recipient (such as acertain relative of the donor). The funds processor interacts with thepoint of donation provider to cause a funds issuer to issue funds thatare then provided to the intended donation recipient. The funds issuerand the donor have an existing contractual relationship such that thedonor will reimburse the funds issuer, or the funds issuer will usefunds that it already holds on behalf of the donor.

In a preferred embodiment to be discussed in detail below, the presentinvention is implemented within an existing credit card network such asthe VISA credit card network. In this embodiment, the funds issuer maybe an entity such as an issuing bank, which has issued a VISA creditcard to the donor. The donor will thus have a credit based account withthe issuing bank, and he may also have a reward points account held bythe funds issuer. As known in the prior art, issuing banks may awardreward points to its customers based on expenditures made with thecredit card. For example, a customer that charges $2,000 on his creditcard will have 2,000 points entered into his reward account with theissuing bank. The customer may accumulate reward points and ultimatelyredeem some or all of his reward points in exchange for a product orservice. For example, a customer may be able to exchange 5,000 rewardpoints for a DVD player, or 35,000 points for an airline ticket.

Reward points systems such as those provided by a credit card issuingbank are referred to as funded systems, wherein the issuing bank willset aside the par value of the points awarded for subsequent redemptionby the consumer. Thus, when the issuing bank awards 5,000 points, andthe par value is 0.01 (one cent), then the issuing bank will have aliability of $50 to the consumer and will set aside that $50 to coverconsumer's redemption of the points. For example, a consumer may electto redeem his 5,000 reward points and the issuing bank will use the $50to make the purchase designated by the consumer (e.g. via a related website), it may give cash back to the consumer, etc. In any event, whenthe consumer has a reward point account with an issuing bank, heeffectively has a credit with that bank for the par value of the totalnumber of points in the account.

In the credit card network embodiment, the point of donation providermay be a merchant using a point of sale device such as a POS terminal,cash register or the like. The funds processor is an entity that managesthe credit card transactions between the merchant's POS device, theissuing bank, and another entity known as an acquiring bank. In ageneral credit card transaction between the consumer and the merchant,the credit card is swiped into the POS terminal and a request is made bythe POS terminal to the funds processor to approve and execute thecredit card transaction. The funds processor will interact with theissuing bank to determine if the consumer has adequate credit to fundthe requested transaction. Assuming this is the case, then the fundsprocessor will approve the transaction and the POS terminal will beinformed of this approval. The funds processor will instruct theacquiring bank to pay the merchant the purchase price, and the issuingbank will be instructed to make payment to the acquiring bank. Theissuing bank will then issue a bill to the consumer (usually at the endof a billing cycle such as monthly) that will list all of his purchasesand demand payment. This process, which is well known in the art, is thebackbone for most credit card transactions that occur in networks suchas VISA and MASTERCARD.

The present invention will leverage the existing credit card network toprovide for donations to be made to intended recipients in one or moreof various forms. In one embodiment, a donation may be made in the formof reward points by the donor to the intended recipient. The POSterminal functions as a point of donation provider (POD), and willprovide instructions to the funds processor to execute the donationtransaction. First, the POD will provide a user interface that allows adonor/consumer to request a donation of reward points to be made. Adonor approaches the POD (perhaps ancillary to making a purchase at themerchant) and swipes his credit card. The POD processes the magneticstripe information as it would in a credit card transaction, and sendsthe appropriate identification information (e.g. issuing bank, accountnumber) over the credit card network to the funds processor (again, asit would in a normal credit card transaction). The funds processor willcontact the funds issuer (the issuing bank) and request the funds issuerto look up and return the number of reward points held in the donor'sreward point account by the funds issuer (as explained above). The fundsprocessor will then return the reward point information to the PODdevice, which will display a message to the donor in the followingmanner:

“You have 6,510 reward points available for donation. Enter the amountof points to be donated”.

The donor may then enter the desired number of reward points to bedonated, which will be transmitted back to the funds processor. Thefunds processor will contact the funds issuer and inform it that thereward points will be redeemed. The funds issuer will then decrease thedonor's reward point account by the designated number of reward pointsand provide payment to the funds processor, either in real time or in abatch mode at the end of a periodic cycle (e.g. daily, weekly, monthly,etc.) The funds processor will then make payment of the appropriateamount to the intended recipient, which is either an organizationalrecipient or an individual recipient as explained below.

The funds processor may charge a transaction fee to the donor, which maybe paid in the form of a credit card charge on the card used to executethe transaction, or it may keep a percentage of the amount designatedfor donation, etc.

As indicated above, funds may be donated to an organizational recipient,such as the USO, or to an individual recipient, such as a relative ofthe donor stationed in the armed services abroad. The donor may indicatethe intended recipient in one of several ways. In one embodiment, thedonor has a profile previously configured and stored in a database withthe funds processor or the funds issuer. For example, in the event thatthe donation service of the present invention is sponsored andimplemented by the funds processor, then the profile may be stored withthe funds processor, and may include various information such as adefault recipient, a default donation amount, an indication that fundsmay be donated periodically or on demand, etc. The donor profile mayprovide as follows:

DEFAULT RECIPIENT: PVT. JOHN SMITH ARMED SERVICES ID 123456789 DEFAULTAMOUNT: 1,000 POINTS DEFAULT DONATION PERIOD: MONTHLY  X . WEEKLY    WHEN AVAILABLE     ON DEMAND    

This profile indicates that the funds processor will request a donationon a monthly basis of 1,000 reward points (a value of $10 when the parvalue is 0.01 per point) made to Pvt. John Smith. If the profileindicates that the donation is to be made “When Available”, then thedonation will be made shortly after the reward account reaches at least1,000 points. In this event, the funds processor will periodically pollthe funds issuer to ascertain when the reward account of the donor hasreached at least 1,000 points and execute the donation transactionaccordingly. If the profile indicates the “On Demand” option, then the1,000 point donation will only be made when demanded by the donor viathe POD device.

If a default amount is not indicated, then the funds processor willrequest the donor to enter the donation amount during the transaction,as indicated above. In addition, the donor may modify the default amountat any time desired.

In addition to indicating a default recipient in a profile, the systemallows the donor to indicate any recipient at the time of the donationtransaction. This may be done to override or supplement the defaultrecipient. Thus, the donor may execute a donation transaction andoverride the profile by donating 5,000 points to a different recipientas desired.

As indicated, the recipient may be an organization rather than anindividual. For example, the donor may desire for the donation to bemade to a charitable organization such as the USO. In this event, theUSO may disperse the funds as with a donation made to it under prior artpractices.

Donations may be made under this system without requiring a donorprofile to be in the system. In this scenario, since no defaultparameters are entered in the system, the donor will be presented withall donation options (amount, recipient) on the POD interface. This isespecially useful in obtaining donations from users that are not alreadyregistered with the system. For example, a consumer may approach a POSdevice (integrated with POD functionality under this invention) at amerchant intending to use his credit card (issued by the issuing bank)to make a purchase. When the purchase transaction approval request istransmitted by the POS/POD to the funds processor, the funds processorwill detect that the credit card used by the consumer was issued by anissuing bank that is also funds issuer under this invention. The fundsprocessor will query the issuing bank/funds issuer to ascertain thenumber of reward points that consumer may have in his or her rewardpoint account. The number of reward points is looked up by the issuingbank and returned to the funds processor, which will then transmit thenumber of reward points back to the POS/POD device for display on thetouchscreen to the consumer with a query as follows:

“You have 5,500 reward points in you account with Acme Bank. Would youlike to donate some or all of these points to a charitable organization?______Yes ______No”

If the consumer indicates “No”, then the purchase transaction isexecuted as usual. If, however, the consumer has been enticed to makesuch a donation, then the reward point donation transaction is executedas described above. A series of queries will be displayed that willdetermine the number of points to be donated as well as a recipientorganization. A list of potential recipients may be displayed asfollows:

Please choose a recipient of your reward points:

-   -   USO ______    -   American Red Cross ______    -   Armed Forces ______    -   Cancer Research ______

In addition to donating reward points from a single account held by thedonor as described above, it is possible under this invention toimplement a reward point aggregation strategy as described in U.S. Pat.No. 6,594,640, invented and owned by the same inventor as the presentapplication. The '640 patent, which is incorporated by reference herein,incorporates a system and method for consumers to exchange reward pointsfrom various reward point accounts, held by different reward pointsissuers such as an airline, a hotel, a credit card issuer, etc., into acentral reward exchange account, such that the total value of theexchanged reward points may be advantageously redeemed for products orservices. In this invention, as shown in FIG. 2, the funds processor mayact as a reward point exchange entity and interact with a plurality ofreward point issuing entities (e.g. an issuing bank, an airline, and ahotel) in order to aggregate reward point value into an account held onbehalf of the consumer/donor, generally at the request of theconsumer/donor. In this case, the donor may be shown the total number ofaggregated reward points held by the funds processor (in total exchangepoints or aggregated value), and/or the donor may be shown theindividual reward totals from each issuing entity (the issuing bank, theairline, and the hotel, for example). The donor may opt to exchangereward points via the POS/POD device at the time of the donationtransaction, and then make the desired donation, or the donor may chooseto use only reward points that have already been aggregated into hisreward account previously.

In some cases, the donor may use reward points that are earned as aresult of a current transaction. For example, when a consumer/donorexecutes a purchase transaction at the merchant's POS/POD device, he maybe provided with the following option:

“You have earned 500 reward points from this transaction. Would you liketo donate them to a charitable organization?” ______Yes ______No”

If the donor chooses “Yes”, then the reward points issuing entity—whichmay be the merchant itself, or which may be the issuing bank, or whichmay be a combination of both such entities—will provide the donationamount equivalent to the reward amount to the designated organization orindividual recipient as described above, rather than crediting thereward points to the donor's reward account as in the prior art.

In another embodiment, the donor may make a donation to the charitableorganization in the form of consideration other than (or in combinationwith) reward points. For example, the following query may be displayedat the POS/POD terminal:

“Would you like to make a $5.00 donation to the USO?” ______Yes ______No

If the donor chooses yes, then the POS/POD device will add thedesignated amount to the total purchase price. The donation amount willbe arranged to be conveyed to the recipient by the funds processor, andthe purchase price will be paid as in the usual prior art manner.

In addition to the POS/POD terminal device described with respect to theabove embodiment, the present invention allows donations to be made asdescribed using other devices such as a personal computer interconnectedover the Internet. In this case, a donor would load a web page from aweb server associated with the funds processor. After log in, the webpage would be a portal for the donor to perform various tasks asfollows:

-   -   View individual reward account totals    -   View aggregated reward exchange account totals    -   Execute reward point exchanges into his reward point exchange        account    -   View/update his donation profile or other user profile        information    -   View donation activity    -   Print records of donation activities for tax purposes    -   Execute donation transactions

Another embodiment envisioned by this invention is the use of a touchtone telephone to access account information and execute exchanges anddonations as described above, in a manner well known in the art oftelephone control systems. Likewise, kiosk stations such as ATM machinesmay be used to perform the inventions described herein.

In a further embodiment, a customer is able to make a donation of valueat the point of sale such as a POS terminal or web site that isequivalent to the difference between the amount of money being spent andthe next rounded off denomination of money, such that the purchaseamount is “topped off” with a donation to a selected charity. Forexample, a customer may spend $8.67 at a store POS terminal, and thenelect to donate 0.33 to make his total expenditure $9.00 even, or $1.33to make his total expenditure $10.00 even, etc. This may apply to pointsexchange and redemption transactions as well as cash or credittransactions.

Thus, the example above applies to a cash transaction scenario and acredit transaction scenario. In a points transaction scenario, acustomer elects to use reward points in exchange for an item at a pointof sale. For example, the customer may desire to pay for a music CD thatcosts $9.21 by redeeming an equivalent value of reward points. If thereward points have a redemption value of 1 cent per point, then thecustomer would have to redeem 921 points to obtain the CD. The customerwould also be given the option to donate an additional 79 points to evenoff his purchase amount so that he will redeem exactly 1000 points, 921of which will be applied to the purchase of the CD and 79 of which willbe donated to an applicable charity. The next rounded off increment maybe changed as desired by the system operator or the customer making thedonation.

Donations made under this invention may be tracked by one or more of thevarious entities involved in the donation (e.g. the funds processor). Assuch, milestones that are reached may be memorialized for the donor. Forexample, a certificate may be awarded when a donor reaches a 10,000point donation milestone, or a $500 donation milestone, etc. This is afurther incentive for donors to make donations under the presentinvention.

It is also noted that in addition to redeeming points for the donationwhereby cash or cash equivalent is transferred to a donee as describedabove, the present invention also contemplates the direct transferenceof reward points from the account of a donor into an account on behalfof the donee. As such, the donee may then aggregate or redeem thedonated reward points in the same manner as if he/she had earned theminitially. Thus, for example, the donor would be given the option todonate 500 reward points earned in a transaction (or previously earnedor aggregated) directly to a donee, whereby that donee would have anaccount opened in the amount of 500 reward points (or would have anexisting account increased by the donated 500 reward points). The doneecould later redeem those points as desired.

In a further embodiment of this invention, a geocentric focus isimplemented whereby a community of geographically-defined donors maymake donations as described herein to one or more of a group ofpredefined geocentrically based recipients, all of which may be managedand/or sponsored by an entity in that geographic region. For example, acommunity bank may sponsor a donation program wherein persons in thatcommunity are enabled to make donations of reward points, cash and thelike to one or more donees in that community. This enables charitablecontributions to be made at the local (or regional) level withoutrequiring customers to have to write checks for small amounts such as$0.25 as in the prior art.

Reward (or loyalty) points aggregation is described in full detail inU.S. Pat. No. 6,594,640, owned by the assignee of the present invention,which is incorporated by reference herein. As described in the '640patent, and with reference to FIG. 4 therein, a plurality of rewardserver computers 10, 12, 14, a trading server 20, a merchant computer 30and a user computer 40 are shown in communication with a network 40. Thenetwork may comprise any type of communication process where computersmay contact each other. The present invention will be described withrespect to an Internet-based network where the reward server computer 10is associated with an airline frequent flyer program. Any type of rewardserver may also be used in this system. The reward server computer maybe a credit card reward program such as offered by American Expresswhere the user earns rewards based on purchases or an advertising basedaward program where the user earns rewards by selecting advertisingcontent.

A user of this system may acquire and accumulate rewards through anyprior art means such as shown on FIG. 1 of the '640 patent, which arethen posted in a user's reward account 52 that is accessible through thereward server computer 10. The trading server computer 20 is incommunication through the network 2 with a user on a user computer 40and is additionally able to connect to the reward server computers 10,12, 14 through the network 2 in accordance with techniques well known inthe art for Internet communications. The merchant computer 30 isrepresentative of any site that can communicate with the network thathas goods or services for sale or trade. The merchant may have a directrelationship with the trading server where the direct relationshipallows for a streamlined process for allowing a user to acquire productsoffered via the merchant computer. Alternatively, the merchant computermay be an independent merchant that does not currently have a profiledefined in the trading server that will accept payment from anothercomputer system in any one of well known e-commerce embodiments.

The rewarding entities may be any type of entity that has a service forallocating points or consideration for user actions. The reward servercomputers 10,12, 14 may be of any type of accessible server capable ofholding data about a user along with a corresponding earned value thatis negotiable for other goods, services, or points of another system. Inthe preferred embodiment, the airline reward server computer 10 mayrefer to one or several different airlines that have frequent flyerprograms or the like. The credit card reward server computer 12 mayrefer to any type and number of credit card server systems capable ofholding, increasing or decreasing a user's earned rewards acquiredaccording to the terms of the credit card program to which the user hasenrolled. The marketing reward server computer 14 may refer to one or amultitude of network accessible marketing systems that allow a user tohave an account where points or other redeemable value may be stored,updated and redeemed by a user. The trading server computer may be anytype of computer system that allows users to access the system in orderto perform the processes involved in this invention. In the preferredembodiment all of the systems described are accessible through theInternet and the user may freely navigate to any site by means wellknown in the art.

The present invention allows issuers who originally sold reward pointsin their program for use as an incentive by third parties to repurchasepoints at a substantial discount, thereby reducing their liability andallowing for a trading strategy that enables points to continually besold and repurchased. This may be a separate accounting procedure thanwhat is used for points that are granted.

The method of allowing the user to redeem the accumulated reward pointsfrom one or more of a plurality of reward entities will now be describedwith respect to FIG. 4 and the data flow diagram of FIG. 6 of the '640patent. The trading server system would allow users to “log in” toaccess the functionality provided where the user may interact withapplications, forms or controls. For example, the user may view hisaccount information by using a web browser to enter the appropriateidentification information and then select buttons, links or otherselectable objects to navigate to the part of the system desired. Theuser, from the user computer, makes a request to the trading servercomputer 20 at step 102, requesting redemption through the network 2 fora portion of the pre-accumulated reward points stored for the user inone of the rewarding entities. A user reward account 52 is associatedwith each of the reward servers but is only shown in FIG. 4 connected tothe airline server for sake of clarity. The user may interactivelyselect rewards to be redeemed, or the system may determine which rewardsare to be redeemed based on a previously defined user profile rule. Thetrading server computer 20 “obtains” the reward points from a rewardserver 10, 12, 14 stored in the user's account 52 by contacting theappropriate reward server at step 110 according to the user'srequirements, by using the connection parameters as defined in adatabase 54 on the trading server as shown in FIG. 5 of the '640 patent.In one embodiment, the trading server retrieves reward account balanceinformation at step 114 from the reward server for the user. In anotherembodiment, the trading server transfers as part of the communication110, the requested reward mileage to be redeemed. The reward servercomputer 10 decreases the users reward account 52 by the requestednumber of reward points. The term point is used to reference any earnedvalue that has a cash equivalent or negotiable worth as in “frequentflyer” point or mile. The reward server computer 10 conveysconsideration to the trading server computer 20 where the considerationcorresponds to the number of reward points decreased in the user'saccount 52 on the reward server 10. For example, the consideration maybe in the form of a monetary credit to an account that exists betweenthe trading server and the reward server, that gets paid at the end of apredefined billing cycle (i.e. every month). The trading server computer20 increases the reward exchange account 54 associated with the user bythe received number of points. The trading server computer 20 in turn,receives the consideration from the reward server computer 10.

In the second part of the transaction (see FIG. 7 of the '640 patent),the user from a user computer 40 may make a request 150 to purchase anitem from an associated merchant computer 30. In the preferredembodiment, the merchant computer system will be a networked computersystem accessible via the Internet. The user would visit the site byselecting on a link from the trading server's web site or by enteringthe name or address of the destination site. The user may identify oneor many items to be acquired from one or several merchants 30. Thetrading server computer 20 would confirm that the user has sufficientpoints to purchase the selected item by checking the user's rewardexchange account 54. The trading server computer 20 would request themerchant computer to deliver the item to the user. The user deliveryinformation may be retrieved from the trading server computer 20 or maybe supplied in some other manner. The trading server computer 20 woulddecrease the user exchange account 54 by the number of pointscorresponding to the purchased item. The trading server computer 20conveys consideration to the merchant computer 30 equivalent to the costof the item by means well known in the art of electronic commerce (eg.by a preexisting account, credit card, etc.) In the alternative, theconsideration may be a direct transfer of points to an accountassociated with the merchant.

Policies and profiles may be established to automatically contact eachof the reward servers according to a user redemption profile (see FIG. 5of the '640 patent) to transact the required payment for an itemselected by a user. This profile may indicate the order of redemptionand method of providing funds sufficient to cover the purchase afterredeemable points are exhausted. For example, if a user has a preferredair carrier where the user would like to retain mileage in that rewardsystem, the user may specify a priority of use indicating the rewardresources that should be exhausted prior to accessing the most desirablerewards. Following the selection of an item to be acquired, the servermay contact all of the reward resources according to this profile toselectively redeem each as required to meet the purchase price. Theprocess may be performed in real time or as a background process wherethe user may select how the transaction should proceed. If the userexhausts lower personal worth resources from the reward servers, thesystem may be required to contact the user before the transaction isallowed to proceed to redeem points. A classification system may also beused to indicate rewards of similar worth. If for instance, a frequentflyer program supports multiple classifications of miles that may beredeemed differently, the user may optionally define how those resourcesshould be managed during redemption. The redemption process would thenhonor those rules elected by the user to select from several differentreward programs instead of redeeming rewards strictly on a valuerequired from the first reward program contacted.

FIG. 8 of the '640 patent describes the process steps involved inenrolling a user to utilize the trader server. The data entered by theuser may be used in determining whether a user allows unsolicited offersto be presented from the trading server. The user's preferences formanufactured goods services, products, travel destinations, hobbies,interests or any other user entered criteria may be stored in thedatabase for subsequent use by the system. The trading server has theability to receive offers from reward servers or merchants which maythen be directed to users based on the database profile informationprovided by the user (see FIG. 9 of the '640 patent).

The trading server may also be contacted in response to a button orhyperlink located on a web page accessible by the user from the airlinereward server. In a similar manner, hyperlinks or calling routines mayallow a user to access a reservations system or merchant from thetrading server. The link would direct the user to partner or associatedair carriers where the points in a user exchange account on the tradingserver 20 may be used to acquire reduced fare flights.

The system used to implement the aforementioned method will now bedisclosed with respect to FIG. 5 of the '640 patent. The system iscomprised of a trading server computer connected to a network ofcomputers where a user interface is established whereby a user from auser computer may access the server to request the transaction tocontact a reward server computer system. In the preferred embodiment,the server has memory means for storing the user account information,user profiles and rules specified by the user, system, or merchant. Thetrading server also has communications means to allow users to accessthe server and to allow the trading server to contact reward servers andprocessing means to interpret the rules and coordinate the contact tothe respective reward servers. The processing means is adapted to allowthe user to request and exchange consideration for rewards from rewardservers. The processing means additionally is adapted to coordinate theexchange of consideration and increase or decrease the user exchangeaccounts stored in memory in response to actions performed by the usercomputer, reward server and merchants.

In the preferred embodiment, the memory means comprises a databasestructure that is used to record the transactions associated with thepreviously described method. Records indicating the changes and currentvalue of user exchange accounts are updated according to the requestprocessed by the processor.

In response to a request for redemption, the trading server looks up thecontact properties of the reward server to be contacted. The userinformation is submitted to the reward server to display the availablepoints that may be redeemed. In another embodiment, the requestadditionally contains a value to be redeemed. The processor establishesa communication link with the reward server and a transaction request issent to the processor of the reward server. The processor of the rewardserver may perform actions that may allow or refuse the requestedaction. In another embodiment, the trading server processor may begranted direct authorization to modify the user's records in the rewardserver database without analysis by the processor of the reward server.A conversion rate may be applied to the transaction such that the rewardserver reduces the available rewards in the user's account. The rewardserver then transfers consideration to the trading server thatcorresponds to the value reduced in the reward system. In response tothe receipt of the transfer or approval of the transfer, the tradingserver increments the user account balance to reflect the receivedconsideration and the connection to the reward server is dropped. Atransaction log may be used to record each of the transactions in case areconciliation process is required at a later time. The increase in theuser's exchange account may then be stored until a user finds an item tobe purchased.

The user selects the desired object from the merchants by indicating thetype of product or service to be procured. In one embodiment, thetrading server contacts the merchant server to return to the user a listof products that match the user's search criteria or if the user hadspecified in detail what was desired, the product may be directlyacquired from a merchant. A communication link is established betweenthe trading server and the merchant computer or designee for e-commerce.Direct acquisition may be enacted by contacting the merchant computerand supplying the user indicia, the product indicia, and the redemptionvalue sufficient to secure the transaction. In response to thetransaction request, the merchant computer will receive theconsideration supplied and contract for the delivery of the product. Inanother embodiment, the consideration required for the item selected issent to the trading server where based on the available points in theuser's exchange account the trading server will determine whether theconsideration is available. An authorization process may be incorporatedat this point to request authorization from the user or in a moresimplified process, the consideration will be transferred to themerchant computer and the user's exchange account will be reduced. Themerchant computer will receive the consideration and will effectuate adelivery transaction to be issued.

The goods may also be placed under direct control of a distribution armof the trading service so that the user places the order with thetrading service directly and the merchants are not directly involvedwith the sale of the goods.

Thus, the present invention provides a liability management system forissuers of reward points, which allows them to take points off the booksand eliminate them, if desired, at a discount rate. This system enablesthe sale or repurchase of points with a trading strategy in which pointsneed not expire.

The present system may be implemented by means of a smart card whereinfrequent use points may be accumulated on the user's card every time thecard is used for associated application. For example, if a user uses hissmart card to pay for a hotel that normally gives reward points, thosereward points may be stored on the smart card. Likewise, when the cardis used for the purchase of an airline ticket, the points would be addedto the smart card. The user may then redeem the accumulated rewardpoints by inserting the card into a vender associated with a computerconnected to the Internet. The trading process proceeds as describedabove, except that the points are obtained directly from the smartrather than a reward server.

The user may have a credit card, debit card, or stored value card thatis linked to their points account in such a way as to permit them to payfor purchases with a merchant by using the card, wherein the merchantuses the existing credit card payment infrastructure as if payment werebeing made/authorized by a bank linked to the credit card or debit cardaccount, but in fact the card is linked to the user's points account. Inthis manner, the user and merchant can use the points account to pay forpurchases in a seamless manner whereby points are used for considerationrather than or as a supplement to cash and traditional credit.

Other aspects of this invention will now be disclosed that will enhancethe reader's understanding of the application of this invention.

The user can purchase points from the system, borrow points from thesystem, etc., and basically treat the points as cash consideration forpurposes of such transactions.

The system can prioritize the order of points being traded based on apredetermined set of rules such as in higher value points being issuedbefore those with a lower value.

Merchandisers also benefit from the use of this system where anothermarketing channel is afforded for products that are often purchased byfrequent travelers with high disposable income. Products and servicesencompassing jewelry, flowers, limousine transport, timeshare rental maybe exchangeable for points stored in this system. Items purchasedthrough the system may also be paid for by a combination of points andcurrency which might be the case when a user does not have enoughaccrued points to meet the purchase consideration of an item selected.

It is anticipated that high quality limited access products may benefitfrom the distribution methods afforded by this system. For example,companies like DeBeers and Chanel may take advantage of thisdistribution means without impacting the level of quality or excellenceassociated with their products.

Manufacturers can discount or liquidate goods for points in a mannerthat doesn't negatively affect the perceived value of the goods (i.e.not in direct competition with the mainstream sales). That is, themanufacturer can place overstocked, end of run type goods and the like,place them in the chain of distribution for exchange with points, andnot be in direct competition with cash sales of its mainstream products.

Resort destinations that are managed by property management companiessuch as RCI may be integrated into this system where instead of tradingaccommodations with only those having similar property, it is nowpossible that the rental of the property may be achieved by conversionfor points.

Offers may be distributed to users of this system where substantialrebates or reduced rates are described in the offer. Time sensitiveproduct offerings can also be accommodated in the system where the valueof the product is decreased according to a life span of the product.Time sensitive product offerings such as food products or concerttickets can have an associated diminishing or escalating value based onthe length of the offer.

Using this system it is now possible to coordinate the products ofseveral different providers into one package. A user of this system maytherefore select an airline, hotel, car rental and Broadway show ticketsin New York, individually or in a prepared package from one location bytrading points where the package may not have existed before where thetrading system coordinates all aspect of the transaction and reduces theuser's exchange rewards in a corresponding manner.

Other purchasing leverage not specifically addressed previously may alsobe acquired by combining the power of a pool of high profile users ofthis system where these users may be allocated access to products orservices not generally distributed to the remainder of the system users.Points collected in the system by these users may afford them access tolimited distribution channels where higher discount levels or premiumluxury products may be acquired. Direct access to cartel products suchas diamonds, duty free items and other restricted access product orservice offerings are also accommodated through the coordination of thetrading server with these specialized service and product providers. Forexample, a preferred client distribution channel such as found in aEuropean market for luxury goods would be made available to users ofthis system where the prices for the objects in this preferred channelmay be significantly lower than retail for objects that are typicallyreserved for limited distribution at premium prices. The trading servermay additionally have exclusive rights to allocate access to certainpremium products, services, events, travel destinations oraccommodations in accordance with any right or grant permitting suchallocation to any user of the system. A distribution channel may makeavailable exclusive products for all or a limited amount of the membersof the system where the trading server system controls access to theoffer. Parameters associated with the available quantity, duration,exchange rates, etc may be input into the system to be used in theallocation algorithm to restrict the offer. Upon user access, thetrading server would, in these cases, modify the premiums offered toreflect the immediately attainable items for the current user and mayadditionally display or provide access to premiums that may be acquiredthrough payment by other means (i.e. cash, charge, debit) to make up thedifference between the user's available points and the points requiredto accept the offer.

In another embodiment of this invention, airlines seeking to providehigher levels of personalized service for their business travelers willprovide access to the Internet or access to in-flight services such asvideo games, for a fee or in place of granting mileage rewards ontranscontinental or transatlantic flights. Access to video games may beafforded to the traveler where the availability of different gamesdepends on the number of reward points traded in by the traveler. Therewards may be converted using the trading server of this invention,where the user may opt to forego collecting mileage in return foraccessing on-board entertainment provided in a standalone mode or in alinked mode. For example, users may select to play video games, accessthe Internet or utilize Email via a seatback or tray table mountedinterface and controller. The user may optionally connect a laptopcomputer to an interface port of the aircraft using an Ethernet,parallel, USB connection or proprietary connector provided by the aircarrier. In the preferred embodiment, the user would select theconnection speed and type for communications based on whether in-flightor external services were to be accessed. Other types of businessservices may additionally be used and accounted for, such as usingnetwork printers or fax equipment. RF, satellite or microwave basedcommunications may be used for real time communications where sufficientgeographical coverage is provided.

The interface would allow a user to login using the frequent flyeraccount information or preferably, the trading server account login idand password, where the user may use points awarded from another aircarrier or point server to “pay” for the services accessed. The accountbalance from the trading server may be transferred to the localcontroller prior to takeoff for each user that logs in to the tradingserver. Once the plane has departed, depending on the linking or accesscapability afforded by the air carrier or service provider, the user'saccount may be modified in real time or upon reconnection followinglanding, based on services selected by the traveler. If a real time linkis supported, the user's exchange account may be periodically debitedaccording to the services selected and duration of use.

In another aspect of the invention, an electronic bartering system isimplemented, wherein product manufacturers, producers, distributors,etc. can provide surplus or overstocked goods for liquidation into thechain of supply of the system and exchange then for points as describedherein. This provides an inventory management and liquidation system forthese manufacturers and sellers.

In addition, the value of the reward points may fluctuate as a functionof the company's performance, which may be measured by reference to theprice of its stock, revenue, earnings, or some other parameter that isagreed to that reflects the relative performance of the company. In thismanner, companies that perform well would provide an additionalincentive to a user for using their frequent use program rather than acompetitor's program. For example, all other parameters being the same,a user would likely choose the Acme credit card company over the Betacredit card company when the user determines that the Acme companyperformance results in a 10% increase in the number of points otherwiseearned by using its credit card. The value may also fluctuate as afunction of the number of points outstanding or the desirability of theissuer to reduce its liability or make it more robust.

What is claimed is:
 1. A funds processor for facilitating a user makinga donation to a third party by redeeming reward points, the fundsprocessor being interconnected via a network to an issuing bank computerthat stores a user credit or debit card account linked to a credit ordebit card issued to a user and a user reward point account associatedwith the user credit or debit card account that stores reward pointsearned by the user as a result of a transaction made by the user withthe credit or debit card, wherein the funds processor is programmed to:send a web page to a user device comprising a query to the user if adonation is desired to be made by the user to a third party, wherein thedonation is funded by redeeming reward points from the user reward pointaccount; receive a donation request from the user device, wherein thedonation is requested to be funded by redeeming reward points from theuser reward point account; process the donation request with the issuingbank computer by requesting the issuing bank computer to redeem rewardpoints from the user reward point account in order to fund the donationby: reducing the number of reward points in the user reward pointaccount, and providing payment to the funds processor of a monetaryvalue corresponding to the reward points reduced; and convey themonetary value to an account associated with the third party.
 2. Thefunds processor of claim 1 wherein the funds processor is furtherprogrammed to receive the payment from the issuing bank computer in realtime.
 3. The funds processor of claim 1 wherein the funds processor isfurther programmed to receive the payment from the issuing bank computerin a batch mode at the end of a periodic cycle.
 4. The funds processorof claim 1 wherein the web page is provided by a web server associatedwith the funds processor.
 5. The funds processor of claim 1 wherein theweb page enables the user to enter the number of reward points to redeemfor the donation.
 6. The funds processor of claim 1 wherein the numberof reward points to redeem for the donation is a predetermined defaultamount.
 7. The funds processor of claim 1 wherein the web page queriesthe user for an identification of the third party to which the donationwill be made.
 8. A method of a funds processor facilitating a usermaking a donation to a third party by redeeming reward points, the fundsprocessor being interconnected via a network to an issuing bank computerthat stores a user credit or debit card account linked to a credit ordebit card issued to a user and a user reward point account associatedwith the user credit or debit card account that stores reward pointsearned by the user as a result of a transaction made by the user withthe credit or debit card, comprising the steps of: the funds processorsending a web page to a user device comprising a query to the user if adonation is desired to be made by the user to a third party, wherein thedonation is funded by redeeming reward points from the user reward pointaccount; the funds processor receiving a donation request from the userdevice, wherein the donation is requested to be funded by redeemingreward points from the user reward point account; the funds processorprocessing the donation request with the issuing bank computer byrequesting the issuing bank computer to redeem reward points from theuser reward point account in order to fund the donation by: the issuingbank computer reducing the number of reward points in the user rewardpoint account, and the issuing bank computer providing payment to thefunds processor of a monetary value corresponding to the reward pointsreduced; and the funds processor conveying the monetary value to anaccount associated with the third party.
 9. The method of claim 8further comprising the funds processor receiving the payment from theissuing bank computer in real time.
 10. The method of claim 8 furthercomprising the funds processor receiving the payment from the issuingbank computer in a batch mode at the end of a periodic cycle.
 11. Themethod of claim 8 wherein the web page is provided by a web serverassociated with the funds processor.
 12. The method of claim 8 whereinthe web page enables the user to enter the number of reward points toredeem for the donation.
 13. The method of claim 8 wherein the number ofreward points to redeem for the donation is a predetermined defaultamount.
 14. The method of claim 8 wherein the web page queries the userfor an identification of the third party to which the donation will bemade.
 15. An issuing bank computer for facilitating a user making adonation to a third party by redeeming reward points, the issuing bankcomputer comprising a user credit or debit card account linked to acredit or debit card issued to a user, and a user reward point accountassociated with the user credit or debit card account, the user rewardpoint account storing reward points earned by the user as a result of atransaction made by the user with the credit or debit card; wherein theissuing bank computer is programmed to interact with a funds processorthat is interconnected via a network to the issuing bank computer inorder to process a donation request made by the user to the fundsprocessor via a web page, by redeeming reward points from the userreward point account in order to fund the donation by: reducing thenumber of reward points in the user reward point account, and providingpayment to the funds processor of a monetary value corresponding to thereward points reduced to enable the funds processor to convey themonetary value to an account associated with the third party.
 16. Theissuing bank computer of claim 15 further programmed to send the paymentto the funds processor computer in real time.
 17. The issuing bankcomputer of claim 15 further programmed to send the payment to the fundsprocessor in a batch mode at the end of a periodic cycle.
 18. A methodof an issuing bank computer facilitating a user making a donation to athird party by redeeming reward points, the issuing bank computerstoring a user credit or debit card account linked to a credit or debitcard issued to a user and a user reward point account associated withthe user credit or debit card account, the user reward point accountstoring reward points earned by the user as a result of a transactionmade by the user with the credit or debit card, comprising the steps of:the issuing bank computer interacting with a funds processor that isinterconnected via a network to the issuing bank computer in order toprocess a donation request made by the user to the funds processor via aweb page, by redeeming reward points from the user reward point accountin order to fund the donation by: the issuing bank computer reducing thenumber of reward points in the user reward point account, and theissuing bank computer providing payment to the funds processor of amonetary value corresponding to the reward points reduced to enable thefunds processor to convey the monetary value to an account associatedwith the third party.
 19. The method of claim 18 further comprising theissuing bank computer sending the payment to the funds processorcomputer in real time.
 20. The method of claim 18 further comprising theissuing bank computer sending the payment to the funds processor in abatch mode at the end of a periodic cycle.